Payments Made by a fiRm to Its Owners from Sources

question 274

Multiple Choice

Payments made by a firm to its owners from sources other than current or accumulated earnings are called:

• A) Dividends.
• B) Distributions.
• C) Share repurchases.
• D) Payments-in-kind.
• E) Stock splits.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a open and competitive market.

Convertible Bonds

Convertible bonds are fixed-income debt securities that can be converted into a predetermined number of the issuer's equity shares at certain times during their life, usually at the discretion of the bondholder.

Diluted Earnings Per Share

A financial metric that calculates the quality of a company's earnings per share if all convertible securities were exercised.

Stock Dividend

A stock dividend is a distribution of additional shares to shareholders, proportionate to their existing holdings, instead of cash.